More Jobs Shed in June by US Economy

ADP reports a much larger than expected drop in jobs of -79k in June versus a consensus of -20k. This indicator has lost its glitter over the past year as it has consistently overstated growth. The average for the past seven months has be 87k per month, growing to 110 since the beginning of this year. Today's decline, when adjusted for this error indicates a substantial drop is possible for non-farm payroll tomorrow. Remember that ADP does not include government jobs, only private sector jobs. Consensus is currently looking for a drop of -60k for non-farm payrolls, and the sixth straight monthly decline in job growth for the US economy. (Note some street economists think this month's large drop in ADP may indicate a catch-up figure). ADP also revised down their May job gain to 25k from 40k. The decline was seen across all categories in the ADP report, with service jobs dropping for the first time since 2002, by 3k. Goods producing jobs fell by -76k, with manufacturing jobs falling -44k in June. Both categories have been declining steadily for the past year and a half. Large companies shed 51k jobs, while companies employing between 50 to 500 lost 35k jobs in June. Small businesses added 7k workers. Construction jobs fell by 34k with the cumulative decline since the peak in August of 2006 totaling 349k. Financial services jobs fell by 3k. The Monster job index fell 3 points this morning, and the Challenger report showed 82k jobs were cut in June (+47% YoY), with 275k jobs lost over the past three months. This is the largest three month decline since the end of 2005.